All sales of residential properties have as a legal requirement for the property transaction a cooling-off period of five days, unless they are exempt contracts. Certain conditions apply that are designed to protect the buyer and seller. Make sure you understand what you as a buyer must do if you wish to cancel the contract.
As the real estate industry is a regulated one, the Queensland Government offers information to the public about cooling off periods. Spot On Conveyancing summarises below the main points, and can assist you by:
- advising whether a cooling off period applies to your contract
- reviewing any contracts buyers may be asked to sign to waive or shorten the cooling off period
- preparing documentation for sellers to waive or shorten the cooling off period.
The cooling off period starts the day the buyer receives a copy of the contract that has been signed by both parties. If the contract arrives on a weekend or public holiday, the cooling-off period starts the next business day.
Please note that the cooling-off period still applies if a representative takes it on the buyer’s behalf.
The cooling-off period ends at 5pm on the fifth day. The buyer must then follow through on the contract and buy the property – subject to the terms of the contract.
Some contracts are exempt from cooling-off periods. These are:
- sales by auction
- follow-up sales after an unsuccessful auction, under certain conditions
- option contracts (or sales contracts formed as the result of an option contract).
Other circumstances for exemption:
- publicly listed corporations
- the State, and statutory bodies
- buying at least three lots at the same time.
In order to cancel a sale contract, the buyer must give the seller written notice by 5pm of the fifth (final) day of the cooling off period. The seller may do deduct a penalty of up to 0.25% of the purchase price from the deposit, and must refund the balance of the deposit within 14 days.
Waiving or shortening the period
If the buyer wishes to waive or shorten the cooling-off period, they must put it in writing, stating they are waiving the cooling-off period entirely or that it will last until 5pm on a particular day.
Queensland buyers of residential property should be alert to the possibility that one of the documents associated with the contract of sale might have the effect of waiving or shortening their cooling-off period.
Such a document can be particularly difficult for buyers to identify when it is included with other documents and presented in a similar format. Be sure to carefully check all the documents attached to your contract of sale, as you may inadvertently deprive yourself of your legislative right to terminate a contract during the cooling-off period by signing such a document.
The buyer must pay the deposit at the time set out in the contract. The deposit holder is usually the seller’s agent, and must put the deposit in a trust account This money cannot be accessed until:
- the seller is entitled to the money on settlement day
- thebuyer is entitled to the money because they lawfully cancelled the sale contract.